After a period of relative stability in the mid-1990s, medical costs are again rising at double-digit rates. Pharmaceutical spending is responsible for a large proportion of this growth. Employers and health insurers have pursued multiple strategies to control increasing pharmaceutical costs, including the use of “incentive formularies” that promote the use of more cost-efficient agents by consumers of care through the use of tiered levels of copayments. The rise of incentive formularies is part of a broader trend in health care whose goal is to shift more of the financial burden of medical decisionmaking onto consumers of care.
This research takes advantage of a comprehensive current dataset derived from a unique relationship that HCP has established with a large national health plan that will give us access to data on 1.25 million people under the age of 65 who were continuously enrolled in the health plan for the two-year period of January 2000 to December 2001—the time when incentive formularies started to become popular. The study will use these data to examine the consequences of shifting decisions about pharmaceutical agents and the associated economic burden to beneficiaries—in particular, the variation in both pharmaceutical and total medical spending and in quality of care associated with changes in cost sharing for drugs.
The study will use two different and complementary approaches: a pre-/post- intervention with a concurrent control group (differences-in-differences), and a regression format to estimate the effects on spending and quality of care implied by the pharmacy benefit designs. The regression approach will allow estimates of the effects of a wide variety of benefit designs. The enrollees are clustered in a smaller set of markets in which the health plan has a large presence. This clustering will allow inclusion of substantial numbers of employers (and enrollees) in the same market that have stable benefit structures, as well as others that have changed their benefit structures, thereby controlling for local market effects.
